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Summary of Significant Accounting Policies | 12 Months Ended
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Sep. 30, 2012
General Policies [Abstract] |
Significant Accounting Policies [Text Block] |
B. | Summary of Significant Accounting Policies
Basis of Accounting The accounts are maintained and the consolidated financial statements have been prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts in the consolidated financial statements and accompanying notes. Estimates and assumptions are based on historical experience, forecasted future events and various other assumptions that we believe to be reasonable under the circumstances. Estimates and assumptions may vary under different assumptions or conditions. We evaluate our estimates and assumptions on an ongoing basis. We believe the accounting policies below are critical in the portrayal of our financial condition and results of operations. Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The Company maintains deposits in several financial institutions, which may at times exceed amounts covered by insurance provided by the U.S. Federal Deposit Insurance Corporation ("FDIC"). The Company has not experienced any losses related to amounts in excess of FDIC limits. Accounts and Notes Receivable Trade accounts receivable for the nightclub operation is primarily comprised of credit card charges, which are generally converted to cash in two to five days after a purchase is made. The media division’s accounts receivable is primarily comprised of receivables for advertising sales and Expo registration. The Company’s accounts receivable, other is comprised of employee advances and other miscellaneous receivables. The long-term portion of notes receivable are included in other assets in the accompanying consolidated balance sheets. The Company recognizes interest income on notes receivable based on the terms of the agreement and based upon management’s evaluation that the notes receivable and interest income will be collected. The Company recognizes allowances for doubtful accounts or notes when, based on management judgment, circumstances indicate that accounts or notes receivable will not be collected. Inventories Inventories include alcoholic beverages, food, and Company merchandise. Inventories are carried at the lower of cost (on a first-in, first-out (“FIFO”) basis), or market. Property and Equipment Property and equipment are stated at cost. Provisions for depreciation and amortization are made using straight-line rates over the estimated useful lives of the related assets and the shorter of useful lives or terms of the applicable leases for leasehold improvements. Buildings have estimated useful lives ranging from 29 to 40 years. Furniture, equipment and leasehold improvements have estimated useful lives between five and 40 years. Expenditures for major renewals and betterments that extend the useful lives are capitalized. Expenditures for normal maintenance and repairs are expensed as incurred. The cost of assets sold or abandoned and the related accumulated depreciation are eliminated from the accounts and any gains or losses are charged or credited in the accompanying consolidated statement of operations of the respective period. Goodwill and Intangible Assets and Impairment of Long-Lived Assets FASB ASC 350, Intangibles - Goodwill and Others addresses the accounting for goodwill and other intangible assets. Under FASB ASC 350, goodwill and intangible assets with indefinite lives are no longer amortized, but reviewed on an annual basis for impairment, or sooner if there is an indication of impairment. The Company reviews property and equipment and intangible assets with definite lives for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of its carrying amounts to future undiscounted cash flows the assets are expected to generate. If property and equipment and intangible assets with definite lives are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair value. Assets are grouped at the lowest level for which there are identifiable cash flows when assessing impairment, principally at the club level. Cash flows for our club assets are identified at the individual club level. The Company’s annual evaluation for goodwill and indefinite-lived intangible assets was performed as of September 30, 2012. The Company did not recognize impairment for the years ended September 30, 2012 and 2011. For the year ended September 30, 2010, the Company recognized $3.6 million of impairment. All of the Company’s goodwill and intangible assets relate to the nightclubs, except for $567,000 related to the acquisition of the media division. Definite lived intangible assets are amortized on a straight-line basis over their estimated lives. Fully amortized assets are written-off against accumulated amortization. Fair Value of Financial Instruments The Company calculates the fair value of its assets and liabilities which qualify as financial instruments and includes this additional information in the notes to consolidated financial statements when the fair value is different than the carrying value of these financial instruments. The estimated fair value of accounts receivable, accounts payable and accrued liabilities approximate their carrying amounts due to the relatively short maturity of these instruments. The carrying value of short and long-term debt also approximates fair value since these instruments bear market rates of interest. None of these instruments are held for trading purposes. Derivative Financial Instruments The Company accounts for financial instruments that are indexed to and potentially settled in, its own stock, including stock put options, in accordance with the provisions of FASB ASC 815, Derivatives and Hedging – Contracts in Entity’s Own Equity. Under certain circumstances that would require the Company to settle these equity items in cash, and without regard to probability, FASB ASC 815 would require the classification of all or part of the item as a liability and the adjustment of that reclassified amount to fair value at each reporting date, with such adjustments reflected in the Company’s consolidated statements of operations. The first instrument to meet the requirements of FASB ASC 815 for derivative accounting occurred in the quarter ended June 30, 2009 when the Company renegotiated the payback terms of certain put options and agreed to pledge as collateral to certain holders a second lien on certain property. The fair value of the derivative liabilities when the securities became derivatives were estimated to be $3.8 million in accordance with FASB ASC 820, Fair Value Measurements, using a Black-Scholes option-pricing model using the following weighted average assumptions:
Volatility |  |  | 73 | %
Expected life |  |  | 3.42 years |
Expected dividend yield |  |  | - |
Risk free rate |  |  | 1.34 | %
The related put options were recognized in temporary equity in the amount of $5.2 million at the time they were issued. The difference between that amount and the value of the derivative of $3.8 million, amounting to $1.4 million, was included in additional paid-in capital. The fair value of the derivative liabilities as of September 30, 2012 and 2011 were estimated to be $75,000 and $1.2 million, respectively, in accordance with FASB ASC 820, using a Black-Scholes option-pricing model using the following weighted average assumptions:
|  | 2012 |  |  | 2011 |
Volatility |  |  | 32 | % |  |  | 37 | %
Expected life |  |  | .17 year |  |  |  | 1 year |
Expected dividend yield |  |  | - |  |  |  | - |
Risk free rate |  |  | 0.06 | % |  |  | 0.13 | %
The gain (loss) for the years ended September 30, 2012, 2011 and 2010 recognized in earnings amounted to $116,520, $128,944 and $(31,314), respectively. Comprehensive Income The Company reports comprehensive income (loss) in accordance with the provisions of FASB ASC 220, Reporting Comprehensive Income. Comprehensive income is the total of (1) net income plus (2) all other changes in net assets arising from non-owner sources, which are referred to as items of other comprehensive income. An analysis of changes in components of accumulated other comprehensive income is presented in the statement of changes in equity. Revenue Recognition The Company recognizes revenue from the sale of alcoholic beverages, food and merchandise, other revenues and services at the point-of-sale upon receipt of cash, check, or credit card charge. Revenues from the sale of magazines and advertising content are recognized when the issue is published and shipped. Revenues and external expenses related to the Company’s annual Expo convention are recognized upon the completion of the convention in August. Sales and Liquor Taxes The Company recognizes sales and liquor taxes paid as revenues and an equal expense in accordance with FASB ASC 605, Revenue Recognition. Total sales and liquor taxes aggregated $6.8 million, $6.0 million and $5.6 million for the years ended September 30, 2012, 2011 and 2010, respectively. Advertising and Marketing Advertising and marketing expenses are primarily comprised of costs related to public advertisements and giveaways, which are used for promotional purposes. Advertising and marketing expenses are expensed as incurred and are included in operating expenses in the accompanying consolidated statements of operations. Income Taxes Deferred income taxes are determined using the liability method in accordance with FASB ASC 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In addition, a valuation allowance is established to reduce any deferred tax asset for which it is determined that it is more likely than not that some portion of the deferred tax asset will not be realized. FASB ASC 740 creates a single model to address accounting for uncertainty in tax positions by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. FASB ASC 740 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. There are no unrecognized tax benefits to disclose in the notes to the consolidated financial statements. Equity Method of Accounting for Investments Investments in companies in which the company has a 20% to 50% interest are accounted for using the equity method and carried at cost and are adjusted for the Company's proportionate share of their undistributed earnings or losses. The 40% investment in one company is recorded in other assets and is a nominal amount. During the year ended September 30, 2012, the Company also acquired a 50% investment in a nightclub for $600,000, which is not yet open. This investment is also recorded in other assets. Put Options In certain situations, the Company has issued restricted common shares as partial consideration for acquisitions of certain businesses or assets. Pursuant to the terms and conditions of the governing acquisition agreements, the holder of such shares has the right, but not the obligation, to put a fixed number of the shares on a monthly basis back to the Company at a fixed price per share. The Company may elect during any given month to either buy the monthly shares or, if management elects not to do so, the holder can sell the monthly shares in the open market, and any deficiency between the amount which the holder receives from the sale of the monthly shares and the value of shares will be paid by the Company. The Company has accounted for these shares in accordance with the guidance established by FASB ASC 480, Distinguishing Liabilities from Equity as a reclassification of the value of the shares from permanent to temporary equity. As the shares become due, the Company transfers the value of the shares back to permanent equity. Also see “Derivative Financial Instruments” above. Earnings (Loss) Per Common Share The Company computes earnings (loss) per share in accordance with FASB ASC 260, Earnings Per Share. FASB ASC 260 provides for the calculation of basic and diluted earnings per share. Basic earnings per share includes no dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of the Company. Potential common stock shares consist of shares that may arise from outstanding dilutive common stock options and warrants (the number of which is computed using the “treasury stock method”) and from outstanding convertible debentures (the number of which is computed using the “if converted method”). Diluted earnings per share (“EPS”) considers the potential dilution that could occur if the Company’s outstanding common stock options, warrants and convertible debentures were converted into common stock that then shared in the Company’s earnings (loss) (as adjusted for interest expense, that would no longer occur if the debentures were converted). Net earnings (loss) applicable to common stock and the weighted average number of shares used for basic and diluted earnings (loss) per share computations are summarized in the table that follows:
(in thousands, except per share data) |  | FOR THE YEAR ENDED |
|  | SEPTEMBER 30, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
Basic earnings per share: |  |  |  |  |  |  |  |  |  |  |  |
Income from continuing operations attributable to Rick's shareholders |  | $ | 7,750 |  |  | $ | 10,041 |  |  | $ | 3,645 |
Loss from discontinued operations, net of income taxes |  |  | (172 | ) |  |  | (2,195 | ) |  |  | (11,603 | )
Net income attributable to Rick's shareholders |  | $ | 7,578 |  |  | $ | 7,846 |  |  | $ | (7,958 | )
Average number of common shares outstanding |  |  | 9,691 |  |  |  | 9,930 |  |  |  | 9,697 |
Basic earnings (loss) per share: |  |  |  |  |  |  |  |  |  |  |  |
Income from continuing operations attributable to Rick's shareholders |  | $ | 0.80 |  |  | $ | 1.01 |  |  | $ | 0.38 |
Discontinued operations |  | $ | (0.02 | ) |  | $ | (0.22 | ) |  | $ | (1.20 | )
Net income (loss) attributable to Rick's shareholders |  | $ | 0.78 |  |  | $ | 0.79 |  |  | $ | (0.82 | )
Diluted earnings per share: |  |  |  |  |  |  |  |  |  |  |  |
Income from continuing operations attributable to Rick's shareholders |  | $ | 7,750 |  |  | $ | 10,041 |  |  | $ | 3,645 |
Adjustment. to net earnings from assumed conversion of debentures (1) |  |  | - |  |  |  | - |  |  |  | - |
Adjusted income (loss) from continuing operations |  |  | 7,750 |  |  |  | 10,041 |  |  |  | 3,645 |
Discontinued operations |  |  | (172 | ) |  |  | (2,195 | ) |  |  | (11,603 | )
Adjusted net income (loss) attributable to Rick's shareholders |  | $ | 7,578 |  |  | $ | 7,846 |  |  | $ | (7,958 | )
Average number of common shares outstanding: |  |  |  |  |  |  |  |  |  |  |  |
Common shares outstanding |  |  | 9,691 |  |  |  | 9,930 |  |  |  | 9,697 |
Potential dilutive shares resulting from exercise of warrants and options (2) |  |  | 6 |  |  |  | 2 |  |  |  | - |
Potential dilutive shares resulting from conversion of debentures (1) |  |  | - |  |  |  | - |  |  |  | - |
Total average number of common shares outstanding used for dilution |  |  | 9,697 |  |  |  | 9,932 |  |  |  | 9,697 |
Diluted earnings (loss) per share: |  |  |  |  |  |  |  |  |  |  |  |
Income from continuing operations attributable to Rick's shareholders |  | $ | 0.80 |  |  | $ | 1.01 |  |  | $ | 0.38 |
Discontinued operations |  | $ | (0.02 | ) |  | $ | (0.22 | ) |  | $ | (1.20 | )
Net income (loss) attributable to Rick's shareholders |  | $ | 0.78 |  |  | $ | 0.79 |  |  | $ | (0.82 | )
*EPS may not foot due to rounding. Additional shares for options, warrants and debentures amounting to 1,352 for the year ended September 30, 2011 were not considered since they would be antidilutive. (1) Represents interest expense on dilutive convertible securities that would not occur if they were assumed converted. (2) All outstanding warrants and options were considered for the EPS computation. Convertible debentures (principal and accrued interest) outstanding at September 30, 2012, 2011 and 2010 totaling $3,521, $7,210 and $9,565, respectively, were convertible into common stock at a price of $10.25 and $10.00 in 2012 and 2011 and $10.25 and $12.00 per share in 2010. No debentures were dilutive in the three years. Stock Options At September 30, 2012, the Company has stock options outstanding, which are described more fully in Note I. The Company accounts for its stock options under the recognition and measurement principals of fair value set forth in FASB ASC Topic 718 Compensation – Stock Compensation. The compensation cost recognized for the year ended September 30, 2012, 2011 and 2010 was $314,761, $8,254 and $405,229, respectively. There were zero, 25,000 and 20,000 stock option exercises for the years ended September 30, 2012, 2011 and 2010, respectively. Fair Value Accounting In December 2006, the FASB issued SFAS No. 157 (ASC 820), Fair Value Measurements. SFAS No. 157 clarifies the definition of fair value, describes methods used to appropriately measure fair value, and expands fair value disclosure requirements, but does not change existing guidance as to whether or not an instrument is carried at fair value. For financial assets and liabilities, SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, which required the Company to adopt these provisions in fiscal 2009. For nonfinancial assets and liabilities, SFAS No. 157 is effective for fiscal years beginning after November 15, 2008, which required the Company to adopt these provisions in fiscal 2010. SFAS No. 157 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
| · | Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
| · | Level 2 – Include other inputs that are directly or indirectly observable in the marketplace.
| · | Level 3 – Unobservable inputs which are supported by little or no market activity.
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company’s derivative liabilities have been measured principally utilizing Level 2 inputs. We classify our marketable securities as available-for-sale, which are reported at fair value. Unrealized holding gains and losses, net of the related income tax effect, if any, on available-for-sale securities are excluded from income and are reported as accumulated other comprehensive income in stockholders’ equity. Realized gains and losses from securities classified as availablefor-sale are included in income. We measure the fair value of our marketable securities based on quoted prices for identical securities in active markets, or Level 1 inputs. As of September 30, 2012, available-for-sale securities consisted of the following:
|  |  |  |  | Gross |  |  |  |
(in thousands) |  | Cost |  |  | Unrealized |  |  | Fair |
Available for Sale |  | Basis |  |  | Gains |  |  | Value |
Tax-Advantaged Bond Fund |  | $ | 1,000 |  |  | $ | 59 |  |  | $ | 1,059 |
In accordance with ASC Topic 320, Investments — Debt and Equity Securities, we review our marketable securities to determine whether a decline in fair value of a security below the cost basis is other than temporary. Should the decline be considered other than temporary, we write down the cost basis of the security and include the loss in current earnings as opposed to an unrealized holding loss. No losses for other than temporary impairments in our marketable securities portfolio were recognized during the year ended September 30, 2012. Financial assets and liabilities measured at fair value on a recurring basis are summarized below:
(in thousands) |  | Carrying |  |  |  |  |  |  |  |  |  |
September 30, 2012 |  | Amount |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Marketable securities |  | $ | 1,059 |  |  | $ | 1,059 |  |  | $ | - |  |  | $ | - |
Derivative liability |  | $ | 75 |  |  | $ | - |  |  | $ | 75 |  |  | $ | - |
(in thousands) |  | Carrying |  |  |  |  |  |  |  |  |  |
September 30, 2011 |  | Amount |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Marketable securities |  | $ | 510 |  |  | $ | 510 |  |  | $ | - |  |  | $ | - |
Derivative liability |  | $ | 1,209 |  |  | $ | - |  |  | $ | 1,209 |  |  | $ | - |
Impact of Recently Issued Accounting Standards In January 2010, new guidance was issued regarding improving disclosures about fair value measurements. This standard amends the disclosure guidance with respect to fair value measurements for both interim and annual reporting periods. Specifically, this standard requires new disclosures for significant transfers of assets or liabilities between Level 1 and Level 2 in the fair value hierarchy; separate disclosures for purchases, sales, issuance and settlements of Level 3 fair value items on a gross rather than net, basis; and more robust disclosure of the valuation techniques and inputs used to measure Level 2 and Level 3 assets and liabilities. Except for the detailed disclosures of changes in Level 3 items, which were effective as of October 1, 2011, the remaining new disclosure requirements were effective as of October 1, 2010. The implementation of this guidance did not have a material impact on the Company’s consolidated financial statements. In September 2011 new guidance was issued regarding the goodwill impairment testing for reporting units. This guidance gives the entity the option to perform a qualitative assessment and determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. This guidance is effective for interim and annual periods beginning after December 15, 2011. The Company has early-adopted this guidance beginning with our Form 10-Q for the quarter ending December 31, 2011. The implementation of this guidance did not have a material impact on the Company’s consolidated financial statements. In June 2011 new guidance was issued regarding the disclosure of the components of comprehensive income. This guidance gives the entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In either option, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. This guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. This guidance does not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. This guidance is effective for interim and annual periods beginning after December 15, 2011 and is required to be adopted retrospectively. The Company will adopt this guidance beginning with our Form 10-Q for the quarter ending December 31, 2012. In July 2012 new guidance was issued regarding the impairment testing related to indefinite-lived intangible assets. This guidance permits an entity to make a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset, other than goodwill, is impaired. If an entity concludes, based on an evaluation of all relevant qualitative factors, that it is not more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, it will not be required to perform the quantitative impairment for that asset. This guidance is effective for interim and annual periods beginning after September 15, 2012. The Company has early-adopted this guidance beginning with our Form 10-K for the year ended September 30, 2012. The implementation of this guidance did not have a material impact on the Company’s consolidated financial statements.

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- Definition The entire disclosure for all significant accounting policies of the reporting entity. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18861-107790 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18743-107790 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18780-107790 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18854-107790 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18726-107790 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 22 -Paragraph 8 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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